Trade Treaties in Trouble

Juncker Merkel DPA
Angela Merkel and European Commission President Jean Claude Juncker yesterday in Brussels. Merkel said she opposed Juncker's plan to adopt TTIP and CETA -- controversial trade pacts with the U.S. and Canada -- without public votes in each E.U. country.
  • Why it matters

    Why it matters

    If parliaments refuse to ratify them, trade treaties between the European Union, Canada and the United States may not be agreed upon this year.

  • Facts


    • Some hoped the TTIP, the Transatlantic Trade and Investment Partnership agreement on free trade between the E.U. and the U.S., could be agreed this year but it is unpopular in many European countries.
    • CETA, the trade treaty between Canada and the European Union, was agreed in August 2014 but it is unclear whether it needs to be approved by all the national parliaments in the E.U.
    • Unilateral agreements do not need the approval of the member states’ national parliaments but mixed agreements do.
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One of the first victims of last week’s Brexit vote could be the proposed transatlantic trade pacts between the European Union and Canada and the United States. At least, the chances for both seemed to dim on Tuesday after the European Commission moved to adopt the controversial agreements without a public vote.

The proposal by European Commission President Jean Claude Juncker would have the commission adopt by a vote of the 28-member countries the so-called TTIP and CETA proposed agreements with the United States and Canada. But Mr. Juncker’s plan — a defiant power grab in the wake  of the Brexit vote — may prove politically unacceptable for E.U. members wary of further alienating right-wing populist movements.

German Chancellor Angela Merkel said she opposed Mr. Juncker’s plan to adopt the agreements directly without public votes in the parliaments or referenda in the 28 countries. The Juncker plan seemed to reflect fear that some E.U. countries would likely reject the agreements in national votes in the wake of Brexit.

On Tuesday evening, Mr. Juncker had told E.U. leaders that the trade treaty between Europe and Canada need not be ratified by each of the bloc’s national parliaments.

However Ms. Merkel, also in Brussels to meet outgoing British Prime Minister David Cameron, insisted that Germany must put the pacts to a vote in the Bundestag. Both agreements face an uphill battle in Germany, where interest groups have rallied opposition to deals they claim will reduce national health and safety standards.

Vice chancellor Sigmar Gabriel called Mr. Juncker’s remarks “unbelievably foolish” in an interview with German daily newspaper Tagesspiegel. He warned that if the European Commission were to push through CETA, TTIP would be dead. Mr. Gabriel worries that given the current mood in Europe, people would focus more on the fact that national parliaments aren’t involved than on CETA itself, if it were to be ratified only by the Commission.

Fears are growing that popular opposition to the treaties could block the European Union’s scope to proceed in the trade agreements.

“The problem now is that the public has woken up to these agreements,” Professor Lorand Bartels, an expert in international law and trade treaties at the university of Cambridge, told Handelsblatt Global Edition. “Now, parliaments have to be seen to listen to the people. That’s what’s changed,” he said.

CETA is a canary in the mine. No one really cares about CETA, it’s more the bad Americans compared to the good Canadians.

Karl-Heinz Paqué, vice chairman of the Friedrich Naumann Foundation for Freedom and member of the Federal Board of the Free Democrats in Germany, called the timing of the remarks unwise in the context of Brexit. “After years of intense and controversial discussion of TTIP and CETA, it is not wise to say national parliaments will not be allowed to ratify the treaty,” he told Handelsblatt Global Edition. “That plays into the hands of right wing and left wing populists who are opposed to free trade and supports the prejudice that Europe is passing over national opinions and doesn’t take them into account.”

In terms of the ratification of CETA, Mr. Bartels said it still had to be passed by the Council of Ministers. He said it was pretty likely to be blocked.

The question is whether the treaty is a mixed agreement, which would mean it also has to be passed by national parliaments, or just settled unilaterally by the European Union. Whether or not CETA is a mixed or unilateral agreement, Mr. Bartels said, depended on the opinion given by the Court of Justice. “Mr. Juncker’s remarks reflect the view of the commission,” he said, adding that it is a longstanding practice that the Commission believes agreements are exclusive but they turn out to be mixed.

The European Commission will decide next Tuesday whether national parliaments ratify CETA or not.

“CETA is a canary in the mine,” Mr. Bartels said. “No one really cares about CETA, it’s more the bad Americans compared to the good Canadians.”

Of the outlook for the trans-Atlantic trade partnership, Mr. Bartels said, “TTIP doesn’t have much chance.” Particularly in Germany, opposition to TTIP is significant. “I don’t ever see that happening,” he said. “TTIP is like CETA on steroids.”

TTIP, a deal between the European Union and United States that proponents say would ease market access, roll back regulation, and broaden cooperation on both sides of the Atlantic, is supported by those who say it will create jobs and strengthen economies in the new free trade zone. But in Germany, many fear it will undermine social and environmental standards and a lack of transparency has further inflamed opponents.

Mr. Paqué was optimistic about the outlook for TTIP, saying that if CETA passed, the Canadian treaty is a kind of blueprint that could have a positive effect on TTIP. “Public opinion is not fixed,” he said. While opposition as strongest in Germany and Austria, if the treaties were to be agreed upon by all other countries, “this could inject a new rationality into a debate which has become highly emotionalized.”

The problem is that in political discourse in most European countries, trade agreements were taboo, Mr. Bartels said. In addition to TTIP’s unpopularity, there are many problems with the trans-Atlantic treaty, he added, ranging from disagreements between negotiators to the ratification issue and extended to the possibility that the European Court of Justice would block the framework set up for resolving investor dispute which could partially impinge on its remit.

Mr. Bartels called Mr. Juncker’s remarks “a sign of desperation and of the unpopularity of these agreements in the member states.” Although he said the European Union sought to address people’s concerns given the unpopularity of the agreements, the remarks could be seen as an attempt to circumvent the democratic impact of people in the states.

On Wednesday, Mr. Juncker responded with irritation to the criticism coming from Germany. He said after legal consideration, the European Commission reached the conclusion that CETA does not require approval from national parliaments. “Personally, it’s the same to me,” Mr. Juncker said after the meetings, adding that CETA is the best trade agreement ever negotiated by the E.U.


Allison Williams is deputy editor in chief of Handelsblatt Global Edition. To contact the author: williams@handelsblatt.com

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